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Are You In A Foxhole?


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Biz owners need to keep moving their strategies forward. Take care of cash, but keep moving!

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Are You In A Foxhole?

  1. 1. Are You in a Foxhole? by R. Thomas Stocker These are scary times for everyone. companies. The market reality is that buyers Business owners, individuals and who do have the funding available to do corporations. There is a constant stream of deals are not willing to pay last year’s advice about how to control your working multiples and are very picky about the capital and overall cash flow. All of it is health and structure of their target prudent. We are being deluged with so acquisitions. Their advice? If you are not a much bad news, how could you not be top-notch company or don’t need to sell, influenced? You really can’t. But you need don’t sell right now. Spend the time to to continue to move forward. Stopping now make your company more valuable. But will make your situation worse (if it is bad at what if you aren’t planning to sell your all). Obviously a few sectors are in very bad company right now? My advice is the same. shape. Retail, consumer goods and real Regardless of your personal timeline for an estate to be specific, but how about your exit (we all have to go sometime right?) part industry? I’m not sure who (perhaps of your strategic plan has to be to work Warren Buffett or Winston Churchill?) first toward making your company stronger, said “out of carnage will come opportunity”. sustainable and transferable. And now is a Poke your head out of the foxhole for a perfect time. By many accounts, business is minute. And if I’m successful in my down. But instead of just waiting it out, do argument, you will keep it out without the things you need for growth and to getting it taken off. structurally support that growth. Now is the time to be prudent. But it is also Talk to your customers. Find out what you a time of great opportunity to get your can do to increase your value to them. Let business in a much stronger position. First, them know you are confident, not only with pull out your strategic business plan. Don’t survival but your growth prospects have one? Pull out your pencil instead (remember your strategic plan). But be because you need a plan. Start with the careful. Have you had the good fortune of thought of “this too shall pass”. How has having a customer make some unusually the current economic situation affected your large orders? That may not be as good as plan? Your growth time line may need you think. Perhaps they are in trouble and adjustment, that is for sure. But other than are looking for a way to increase their that, the current economic condition should revenue at your expense. Proceed with not have a major affect on your underlying caution. But what can you do to help your long-term strategy. However, you may want customers? Has your relationship changed to take advantage of the current situation. with the current economic climate? Remember, their long-term plans shouldn’t From a market perspective, merger & have changed either. What can you do to acquisition firms are indicating that new help? deals are starting to get harder to close. Many selling companies still have high How about your competitors? Are they expectations for the value of their hunkered down? Great! Go talk to their 10 Larkspur Road, East Greenwich, RI 02818 401-451-9799
  2. 2. customers. Now is a great time to take strategy. If everyone along the supply chain share. Not sure? Your sales force should be were to stretch payables out the situation in tune with the market. Watch and interpret will only be exacerbated. that intelligence carefully, but be aggressive. Most likely you have already assessed and Your competitor’s customers may be adjusted your current capital needs. The looking for help if your competitor is not reality is banks can be and are more picky able to deliver. Why not be the one to about who they will lend to and for what. benefit? You must have a historical performance How is your team? By now you should track record to be credible. It is a buyer’s have done your reduction in force. How is market for them as well. They need to be moral? If you have had to lay people off, comfortable they will be paid back. hopefully you are not doing it in waves. Communications are more important than Each wave will spook those who are left, ever, regardless of your situation. causing moral and productivity to plummet Understand they want to help and will if you further. How can one focus if they are are credible. worried they may be next? If things are not going the way you Do you have the right players to execute promised, get that strategic plan in shape. your plan? Unfortunately sometimes teams Bankers (like investors) don’t like surprises. need to change. This is always a very hard If you are in trouble and don’t have a decision, but different times sometimes take relationship with your banker, have a plan different skills. Although your loyalty to before you initiate that communication. your people is a virtue, is the team that got Bring your Chairman or other advisors in to you where you are keeping you there? Now help, the earlier the better. Your banker will is a good time to act. With the current be more likely to help you if you show you buyer’s market there is a significant amount are being proactive. of top talent available right now. Keep The message from banks is incredibly moving forward. similar to the message from M&A firms. Are you taking care of your suppliers? If Solid historic growth, profit performance you haven’t stretched your payables out, are and strong credible leadership are a few of they calling you more frequently? That may the top attributes of a valuable company. A be a sign things are not well. You should solid strategic plan and good execution of investigate to find out why (the obvious that plan add to that value. They all agree answer of the current conditions is not now is an opportune time to be working on acceptable if you haven’t changed your those plans in order to position yourself for payment habit). You may want to find an superior growth and maximize company alternative just in case. Having sole-source value. suppliers is a risky strategy, especially now. Foxholes are prudent when you are under Keep an especially sharp eye on them for attack and can seem comfortable in dire any market stress and have a plan in case circumstances. But use the time wisely and they interrupt the supply of goods you need. be sure you can see around you. At the end If you are stretching your suppliers, of the day your strategic plan will need to be remember they may be keeping an eye on adjusted to reflect the realities in the market. you as well. A better method may be to But be stingy with wholesale changes that assess your inventory needs and decrease may be knee-jerk reactions to the current your orders. Whatever you do, work with economics. Opportunity is what you make them. Keep them in your discussions and of it. If you assume your competitor is
  3. 3. sitting in their foxhole, look around. You your company’s value now. may be surprised at what you see. Increase To comment on this or other topics important to private business owners, access my blog at About the author; Tom is a Principal of Boardroom Advisory Group, LLC, an owner advisory and consulting firm. Tom serves on the Board of Directors for the RI Economic Development Corp’s Small Business Loan Fund Corporation (SBLFC), the finance arm of the RI EDC. He writes a monthly article for the RI EDC’s Every Company Counts initiative. His articles focus on areas that can add significant value for business owners. Contact Tom directly at 401-451-9799 or Boardroom Advisory Group, LLC is a business advisory and consulting firm specializing in helping business owners resolve day-to-day systemic issues that interfere with cash flow and profitability attainment. The Firm works with both growing and underperforming small to mid-market private companies. The Firm’s team of hands-on senior professionals find and implement solutions to improve top-line and bottom-line growth, increase cash flow, reduce costs, improve process, structure, and use world-class metrics to keep the business on track. The team also has extensive experience working with troubled companies through business restructures and recapitalization. Boardroom Advisory Group’s core focus on developing strategies to drive and measure performance has resulted in a history of sustainable top and bottom line growth, healthy cash flow and increased company value for their clients. For more information about how we can help you build a more valuable business visit our website at ©2008-09 Boardroom Advisory Group, LLC All Rights Reserved. No part of this document may be reproduced without the express permission of the author. All registered trademarks mentioned in this document are the property of their respective owners. Additional articles written by Mr. Stocker include: Start Forecasting Now! Do You Have Contingency Plans? I’m Out of Compliance. Now What? Have You Thought About Your Future Lately? Are you in a Foxhole? Metrics Should Be Everywhere (Part I) Are You an Octopus? Metrics Should Be Everywhere (Part II) What is Value? It’s All About Growth These articles can be accessed at You can also request to be added to his email list to receive his latest articles on a monthly basis on the Company website. Contact Tom at